Think of a business or an organization that would use process costing. What types of waste...

Think of a business or an organization that would use process costing. What types of waste are likely to be generated during the manufacturing process? Are there ways to avoid this waste or to minimize it? How might managerial accounting support the efforts to reduce waste in the production process?

Expert Solution

Process costing is used in organizations producing similar products in large quantity. In manufacturing a product there are many processes that are involved. For example, for manufacturing a bottle of soft drink, the raw materials like water and other ingredients have to be processed, then filled in a bottle and then packaged. During the whole process, some amount of waste is definitely going to be produced, a part of which may be avoidable and some unavoidable. The wastes can be in the form of unwanted production, waste due to faulty method of production, and other waste.

To avoid or minimize such waste one of the methods that can be used is activity based costing which is also called activity based management. This method when applied will help the management to find the areas of improvement in the manufacturing process and do away with the wasteful activities. This will consequently reduce waste of time in processing the product and also reduce the waste of labour, capital and raw materials.

ekkarill92 answered 2 years ago

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